He Said, She Said

by Will on February 13, 2013

Ostensible Speaker of the House John Boehner rejects the president’s call for a higher minimum wage:

“I’ve been deadling with the minimum wage issue for the last 28 years that I’ve been in elected office,” he told reporters. “And when you raise the price of employement, guess what happens? You get less of it. At a time when Americans are still asking the question ‘Where are the jobs?’ why would we want to make it harder for small employers to hire people?”

OK, so leaving aside the question of whether the duration of Boehner’s service renders him an expert on the question, let me pose the issue in an alternate light.

When you raise the compensation for employment, guess what happens? Employers (who have income enough to choose between saving and spending) do less saving, and more spending. The minimum-wage worker has more money in his pocket to spend on goods and services. Businesses where this worker spends money will have higher revenue, and will be able to hire more people or increase orders from suppliers, either of which will increase employment.

There is an equation from Michal Kalecki I could cite that represents this point mathematically, but I think that empirical data is more persuasive. Studies show that increases in the minimum wage do not, in fact, increase unemployment. Moreover, if you look at international figures, you’ll see that high-wage countries such as Australia and Sweden often have better employment figures than countries where poverty wages prevail.

What say you, Boehner?

*I say “ostensible” because Boehner does not seem to be able to deliver a majority of votes, in contrast to the last four Speakers, and in contrast to the prime ministers who play similar roles in other parliaments.

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